Professional Services Automation: Optimizing Project & Service Oriented Organizations / Edition 1

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Overview


PRAISE FOR Professional Services Automation

"SPO/PSA should be viewed by the market as a cost of doing business or, in other words, a competitive necessity for conducting business in the services economy."

–Ted Kempf, Principal Analyst, Gartner

"The depth and breadth of coverage is extraordinary. Any professional or firm considering the implementation of PSA must stop here first–to make a PSA decision without consulting this book first would be foolish."

–Rick Freedman, author, The IT Consultant and The eConsultant

"I have requested each and every department in my organization to look at their respective chapters for incredible insight and concrete solutions."

–Jean Denis Talon, President and CEO, AXA

"This is the reference book that you need to pick up and consider periodically as you plan, analyze, select, and roll out enterprise software."

–Stuart Sackman, Vice President, ADP

"This book is a perfect starting point for any organization wishing to improve their services delivery through the implementation of a PSA product. It provides a clear overview of all of the aspects to consider when evaluating PSA products as well as how to avoid the stumbling blocks to successful PSA implementation."

–Michael Lines, PMP, Publisher, allPM.com–The Project Manager's Homepage

"This guide addresses appropriately the subject of project management as an integral component of the PSA business environment–a sensible and pragmatic approach."

–Lloyd Bartlett, P. Eng., MBA, PMP, Lecturer inProject Management, McGill University
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Product Details

  • ISBN-13: 9780471230182
  • Publisher: Wiley
  • Publication date: 5/3/2002
  • Edition description: New Edition
  • Edition number: 1
  • Pages: 432
  • Sales rank: 1,421,374
  • Product dimensions: 9.00 (w) x 6.00 (h) x 1.13 (d)

Meet the Author


RUDOLF MELIK is the President and CEO of Tenrox and has more than ten years' experience in software engineering and project management. Tenrox, listed in Software magazine's World's 500 Largest Software Companies, won Microsoft's Innovation Solution of the Year award in 2001. A privately held company that has grown at an average rate of sixty percent annually, Tenrox has six products and more than 600 corporate customers in forty countries.

LUDWIG MELIK is Vice President—Sales and Marketing at Tenrox.

ALBERT S. BITTON is Director—Business Development at Tenrox.

GUS BERDEBES is Vice President— Professional Services at Tenrox.

ARA ISRAILIAN is a founder and COO of Tenrox.
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Table of Contents

Foreword
Preface
Acknowledgments
Pt. 1 What Are PSA, SPO, ESM, SRM, ESA, and BPA? 1
Ch. 1 Managing the Service Supply Chain 3
Ch. 2 Streamlining Business Processes 13
Pt. 2 Section A. Professional Services Automation Components 45
Ch. 3 Opportunity Management 49
Ch. 4 Resource Management 59
Ch. 5 Project Management 75
Ch. 6 Purchasing Workflows 91
Ch. 7 Revenue and Cost Accounting 107
Ch. 8 Timesheet Management 119
Ch. 9 Labor Management 133
Ch. 10 Expense Management 143
Ch. 11 Invoicing 155
Ch. 12 Request and Issue Tracking 165
Ch. 13 Knowledge Management 187
Ch. 14 Performance Analysis 207
Pt. 2 Section B. Extended Components 223
Ch. 15 Customer/Partner Relationship Management 225
Ch. 16 Human Resource Management 235
Ch. 17 Complete Enterprise Accounting 251
Pt. 3 Selection and Implementation 263
Ch. 18 Evaluating a Professional Services Automation Solution 265
Ch. 19 A Best-of-Breed Approach 267
Ch. 20 Technology Considerations 271
Ch. 21 Integration 301
Ch. 22 Implementation Strategy 307
Ch. 23 Operations 319
Pt. 4 The Future of Professional Services Automation 335
Conclusion 339
App. A: Other Sources of Information 343
App. B Professional Services Automation Request for Proposal Template 349
App. C In-House Software 363
App. D Professional Services Automation and Enterprise Resource Planning 373
App. E Emerging Standards and Technologies 385
App. F Purchasing Options 389
Index 395
About the Authors 401
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First Chapter

Professional Services Automation

Optimizing Project & Service Oriented Organizations
By Rudolf Melik Ludwig Melik Albert S. Bitton Gus Berdebes Ara Israilian

John Wiley & Sons

ISBN: 0-471-23018-9


Chapter One

Managing the Service Supply Chain

* INTRODUCTION

A considerable amount of literature and software is available regarding supply chain management (SCM), enterprise resource planning (ERP), and customer relationship management (CRM). Enterprise Resource Planning and SCM are primarily back-office applications that focus on accounting, inventory, order processing (fulfillment) and procurement, whereas CRM software mostly addresses front-office needs such as opportunity management, marketing campaigns, call center management, and customer service.

PSA software provides the tools, techniques, and technology that enable project- and service-oriented organizations (PSORGs) to manage personnel, resources, projects, and clients.

Many medium- to large-sized companies utilize single-vendor software systems called ERPs to centralize and manage some of their core business processes. Enterprise Resource Planning software provides accounting, human resources (HR), inventory, procurement, and order-processing functionality. The major benefit of an ERP system is that it provides an integrated solution that can be used in conjunction with reporting tools to gain insight into the company's operations.

The major ERP vendors tend to be perceived ashaving different strengths and weaknesses when compared with each other (e.g., some emphasize their strength in the industrial sector, whereas others focus their strength in providing HR department functionality). In some cases, major enterprises have installed multiple ERPs to gain the benefit of some of these features-that is, they try to get the best features from each offering. In these cases, as we shall see later, these enterprises are essentially following what we call the best-of-breed approach to software solutions.

Traditional enterprise systems such as ERPs and SCMs have focused on the manufacturing and distribution sectors where they originated. The dramatic expansion of the service industry in the last decade has led to many service organizations' trying to apply these traditional ERPs outside of their conventional homes (which is typically in accounting and HR departments) often with mixed results.

This situation has often created the worst of all possible worlds, in which the enterprise is running powerful and expensive ERP systems for the accounting or HR departments, leaving the revenue-producing parts of the organizations like professional services to mechanize themselves in a haphazard manner with spreadsheets and paper, or to attempt building an in-house system. This can lead to situations in which the back-office costs are increasing due to the expensive systems the functional support groups like finance are running, while the front-line groups (who are the ones generating the revenue) suffer from an almost complete lack of productivity and mechanization tools. Essentially, these organizations have produced a situation in which the back-office functions and systems are driving the front-line, revenue-producing part of the organization, instead of the other way around-not an optimal situation. Please refer to Appendix D, "Professional Services Automation and Enterprise Resource Planning," for more details.

Due to the continued aggressive adoption of information technology (IT), increased competition, increased customer expectations, globalization, scarcity of skilled resources, and technological innovations, service organizations are under constant pressure to maximize revenues, minimize project costs, produce more measurable results, improve productivity, and increase customer satisfaction. In addition, using systems such as ERPs, independent project management tools, in-house applications, spreadsheets, or paper-based systems are no longer to be viewed as effective methods for increasing productivity for PSORGs.

Much like manufacturing or distribution companies, service organizations have their own unique business processes. If software applications are to be implemented in order to streamline such processes, then the functionality these applications adopt must focus on the project life cycle.

Some of the unique requirements for PSORGs are dictated by whether their projects are for cost centers (nonbillable and based on budgets) or profit centers. Most IT departments are engaged in internal software development, engineering, R&D, and product design, and they only serve internal clients. The projects and services implemented for these internal clients are based on corporate budgetary constraints and is nonbillable work. Some PSORGs perform work for external clients, and usually perform their billing based on various rating algorithms.

Regardless of whether the work is being done for internal or external clients, the focal point is on implementing the project or service; as such, several questions need to be addressed. How can organizations

* Manage to deliver projects on time and within budget?

* Ensure that proper resources are in place to deliver such projects? * Effectively report on project information in real time?

* Ensure that project information is accessible at all times by anyone?

* Ensure that employees focus on core responsibilities rather than administrative tasks?

* Efficiently manage the life cycle of a service or project engagement?

* Streamline their key service or project processes for greater productivity?

The fact is that very few PSORGs efficiently deliver their services. Due to increased industry complexities and inefficient corporate processes, service workers are not focusing on their key responsibilities. They are instead being bombarded with increasing amounts of administrative tasks, technology issues, unmanaged workloads, and lack of information. There is therefore a great need and an ever-increasing demand for software applications that can render PSORGs more productive and more profitable.

For a discussion of deploying a commercially available PSA solution versus building it in-house, please refer to Appendix C, "In- House Software."

* PRESENTING PSA SOLUTIONS

Professional Services Automation (PSA) describes a set of software solutions that have been designed specifically for PSORGs. These solutions streamline business processes for these organizations. They automate and integrate core business processes so that organizations within these industries can increase productivity and profitability.

Project- and service-oriented organizations are ridden with inefficient processes and behavior (see Figure 1.1). Resources are not utilized at their optimal capacities, collaboration is less than ideal, billing cycles are lengthy, project status is based on outdated information, and project costs are not managed or known with certainty-all of which lead to a less-than-productive organization and decreased profitability. Professional Services Automation solutions address these inefficiencies in much the same way that ERP solutions address the business processes for more traditional industries.

As an increasing number of organizations operate under project- and service-oriented methods, establishing a streamlined and more productive approach for core business processes is no longer simply nice to have, it is a necessity. Professional Services Automation solutions and vendors are therefore addressing this need by leveraging, complementing, and enhancing the required or best features of CRM, HR, project management, and accounting or ERP systems in order to deliver an integrated approach to service efficiency.

* BENEFITS

Because PSA solutions streamline the life cycles of project and service engagements, how can executives determine the benefits and measurable results their organizations can derive from implementing a PSA solution?

PSORGs have traditionally been inconsistent in evaluating their performance metrics. Are billing rates used in an optimal way? Can project costs be managed more effectively? Are resources used effectively? Is employee collaboration optimal for improved project results? Can billing cycles be improved in order to reduce accounts receivable? Organizations implementing projects and offering services are focusing on corporate and process efficiency more than ever. Both areas are essential because services comprise an enormous portion of many modern businesses, and the pressure for high performance and efficiency is higher than ever. The challenge for PSA solutions is to provide, in a quick fashion, functionality that delivers positive, identifiable, and measurable results to these organizations.

The ultimate benefits of PSA solutions are increased productivity and profitability within a short period of time. The ability to achieve such benefits is based on the productivity of the company's resources and the technology used in order to perform projects or services more effectively. Specific benefits include the following:

* Increased employee productivity through more focused work

* More opportunities due to improved resource management

* More effective resource utilization and retention

* Improved client satisfaction due to quicker and more complete billing and lower project costs

* Overall operational efficiency

* Maximization of billable revenues

* Improved reporting capabilities for more effective decision making

* Quicker measurable results

All such benefits lead towards greatly improving profitability.

* HOW CAN MY ORGANIZATION BENEFIT FROM A PSA SOLUTION?

All organizations can benefit from automating their basic business processes (see Figure 1.2). Internal business processes such as opportunity management, resource management, project management, purchasing, expense reporting, timesheet management, and many others are not fully mechanized in most organizations. To gain the full benefit of this mechanization, the organization will have to review its processes and structure them so that mechanization is not inhibited. As can be seen from the ROI sections that follow, significant savings are to be realized in non-re-engineered organizations.

The following chapters further examine the large return on investment and benefits that result with the introduction of PSA solutions in PSORGs.

In evaluating how an organization will benefit from a PSA solution, certain key questions should be asked. How will the organization benefit from

* Increased employee collaboration to deliver projects and service clients?

* Capturing all project-related costs quickly and accurately?

* Accurately and quickly generating billable information at a level of detail and format demanded by clients?

* Streamlining project-related business processes so that clients can be serviced more efficiently?

* Improved management of project portfolios (e.g., resource allocation and utilization, status, costs, billings)?

As can be seen from the figure in the introduction to the next part, showing the complete Professional Services Automation cycle, the services provided by a PSA solution cover the whole range of service and project delivery.

One of the key benefits associated with implementing a PSA solution is the improvement of billable cycles. Increasing billing efficiencies reduces A/R days and improves financial liquidity, which is a clear benefit to most organizations. Another key benefit is the improved management and utilization of resources. Ensuring that resources are scheduled and utilized on appropriate projects is also a clear benefit to all PSORGs.

(Continues...)



Excerpted from Professional Services Automation by Rudolf Melik Ludwig Melik Albert S. Bitton Gus Berdebes Ara Israilian Excerpted by permission.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

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